Do I Need Insurance?

I lost my job and all the benefits and have picked up several contract projects, do I need insurance?

Many Americans have found themselves laid off or cut back in the last several years. In addition to a regular paycheck, the biggest loss is often medical insurance. This scaling back of the economy has allowed many people to freelance or do consulting. While this helps in replacing the paycheck, benefits and insurance are a different story. To answer the question above, the answer is yes.

First, any business whether home based or not needs to have a basic insurance package in place. A business owner’s policy may fit the situation by including property insurance, general liability, and usually some form of business interruption insurance all in one policy. This type of policy will be less than purchasing each type insurance separately with individual premiums for each.

The next critical piece is getting medical insurance in place. Getting a group insurance policy in place for your business may be expensive. During the initial start up, there may be other alternatives to look at when it comes to medical insurance.

First, was COBRA available? Consolidated Omnibus Budget Reconciliation Act (COBRA) health provisions passed in 1986 allows continued group health coverage that otherwise would be terminated. Health insurance is critical to managing risk. A devastating medical issue could bring financial ruin to anyone. If COBRA isn’t available, can you go on a spouse’s group health plan?

Struggling to make ends meets while doing contract and freelance work and trying to manage risk is a difficult but not impossible undertaking. Allowing your home and family’s assets to be at risk should be unacceptable to you. Many folks that utilize a home office and/or work out of their homes make the unfortunate assumption that their homeowner’s or renter’s policy will cover any losses.

Those policies don’t cover businesses. Personal auto policies generally do not cover your auto when being used primarily for business purposes. In addition, many policies have exclusion provisions for ‘illegal’ acts which could include ‘business being conducted in a residential area’ so it’s important to check your town’s specific ordinances and business permitting.

By taking on contract work, you have gone into business for yourself. Sit down with a licensed insurance professional and work together to manage the risk now facing you as a new small business.

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